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The medium-term effect of R&D on firm growth

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  • Marco Capasso
  • Tania Treibich
  • Bart Verspagen

Abstract

This study analyses the effect of R&D expenditure on firm employment growth in the medium term, using six cross-sectional waves of an innovation survey conducted in the Netherlands in all sectors. The analysis is focused on firms having positive R&D expenditure and investigates whether higher investments in R&D (in proportion to firm turnover) translate into higher medium-term growth rates. Comparisons with growth on a shorter term are conducted by following the firm size evolution since the R&D investment for five consecutive years and allowing for firm exit. At all time terms, quantile regression techniques indicate that a higher R&D has a positive effect on high growers and allows a higher number of firms to be high growers. Still, once a firm invests in R&D, even if a higher investment makes the firm more likely to have a very good performance, it does not make it less likely to have a bad one. Copyright The Author(s) 2015

Suggested Citation

  • Marco Capasso & Tania Treibich & Bart Verspagen, 2015. "The medium-term effect of R&D on firm growth," Small Business Economics, Springer, vol. 45(1), pages 39-62, June.
    • Handle: RePEc:kap:sbusec:v:45:y:2015:i:1:p:39-62
    DOI: 10.1007/s11187-015-9640-6
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    More about this item

    Keywords

    Firm growth; R&D expenditure; Industrial dynamics; Quantile regression; L20; L10; O32; L26;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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